Zee Media Bureau
New Delhi: The Reserve Bank on Tuesday said assuming reasonable food management, inflation is expected to be pulled down by base effects till August but to start rising thereafter to about 6 percent by January 2016 – slightly higher than the projections in April.
In April, retail inflation measured by the consumer price index (CPI) decelerated for the second month in a row, supported by favourable base effects [of about (-) 0.8 percent] that moderated the rise in the price index for the fourth successive month.
Food inflation softened to a contra-seasonal four-month low, with the impact of unseasonal rains yet to show up. Vegetables inflation continued to ease, along with that of other sub-groups such as cereals, oil, sugar and spices.
On the other hand, protein items, especially milk and pulses, continued to impart upward inflationary pressures.
Fuel inflation rose for the fourth successive month to a twelve-month high, driven by prices of electricity and firewood. Inflation in these components was accentuated by base effects – the recent price uptick coming on top of muted increases a year ago. Inflation excluding food and fuel rose marginally.
House rent, education, medical and transport expenses were among the major drivers of inflation in this category.
Rural wage growth, although still moderate, picked up. Inflation expectations remain in high single digits, although they may adapt further to current low inflation. Yet, both input and output price pressures remain muted as reflected in the Reserve Bank’s industrial outlook survey. Purchasing managers’ indices also corroborate these developments.
